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As a common form of investment governance, an investment committee (IC) plays a crucial function in the ability of families to define their financial objectives and formulate a strategy for a diversified portfolio. The IC also can be effective as a gatekeeper and to oversee the implementation of investments while providing critical input about the program on an ongoing basis. However, without careful planning and execution, it is not easy to unlock an IC’s potential and benefits.

For an investment committee to be effective, there must be a written committee charter that will help guide and add value to a portfolio. Following five core elements tailored to fit any family’s circumstance, this sample investment committee charter serves as a strong foundation for short- and long-term investment success.

A well-defined governance system is what drives a strategy for portfolio investments—all the while increasing a family’s ability to formulate its goals and policies, make decisions, and perform an oversight function. This article can help families in the development of their own decision-making framework and focuses on three core building blocks of investment governance: (1) people, (2) authority, and (3) process. It also takes a close look at the potential benefits of the investment committee model and presents a set of best practices for families to consider.